The chief defendant in an alleged $15 million preliminary coin providing (ICO) fraud case has submitted a proper reply to the US Securities and Alternate Fee (SEC).

On Aug. 20, Reginald Middleton shared a duplicate of a memorandum of legislation in opposition to the company’s software for a preliminary injunction to proceed a brief asset freeze in opposition to him and affiliated entities.

As reported, the SEC’s injunction implicated Middleton, along with the New York firm Veritaseum Inc. and the Delaware-based firm Veritaseum LLC.

The case

The SEC’s case in opposition to Middleton and Veritaesum alleges that materials misrepresentations and omissions have been made to traders throughout an ICO that raised roughly $14.eight million from late 2017 to early 2018. The company notably additional accused the defendants of conducting an unregistered providing of securities.

Veritaesum offered a digital asset referred to as Veritas (VERI) — represented as a utility token — which was purportedly issued on the Ethereum blockchain and pegged to Ether (ETH) at a 30:1 ratio.

In its submitting, the SEC claimed there have been round $eight million in investor proceeds excellent from the ICO and requested a direct prayer for aid so as to freeze the defendants’ belongings and people of his corporations.

VERI token worth reached an all-time excessive worth of roughly $465 in January 2018. The token is down a whopping 98.5% since, buying and selling at simply over $7 as we speak, in line with coin360.

Middleton’s protection

The memorandum claims that in its attraction for an emergency order to feeze the belongings, the SEC incorrectly claimed that Middleton had transferred a portion of Veritaesum’s belongings to his private account, and states that every one belongings remained within the firm’s management.

It additional underscores that the choose at a courtroom listening to of the SEC’s software on Aug. 12 denied the company’s request to freeze Middleton’s private belongings. It argues that the courtroom ought to now proceed to raise the freeze in its entirety, stating that:

“The momentary freeze on this case has already prompted important hurt to the holders of Veritaseum’s utility tokens, the very folks the SEC is purportedly in search of to guard. The SEC has put forth no proof that Mr. Middleton has dissipated or hid firm belongings or is probably going to take action sooner or later.”

The doc additional presents arguments to strengthen the illustration that VERI is a utility token, including that “past the deadly absence of a safety, the SEC has additionally failed to ascertain a chance of success on its securities fraud and market manipulation claims.”

Different key factors of the doc embrace a protection of Middleton’s credentials as a monetary analyst and particulars of his communications to token purchasers, which, the memorandum argues, explicitly didn’t symbolize VERI as an funding alternative.